A shift in sentiment moved yields higher and the curve steeper on Monday, however we remain far from the top end of the range on yields, (let’s call it 4% on the ten-year and 1.4% on the two.) Strong Fed buying in Treasury land did nothing to help the selloff even though the $7.5BB in 2-3 year note purchases on $14.73BB submitted for sale was very strong compared to recent history.
PPI (Producer Price index), +1.8% MoM compared to +.9% expected while ex food & energy was +.5% MoM compared to +.1% expected, was the culprit for the steeper curve and the feelings translated into higher breakeven rates on TIPS, a proxy for inflation expectations. Ten-year breakevens were higher by 12 bps to 1.64%, and five-years were higher by 8 bps to 1.14%. The market held off on going crazy, as they waited for today’s CPI release which came in higher than expected but we’ll leave that for tomorrow’s post.
Cliff J. Reynolds Jr.
PPI (Producer Price index), +1.8% MoM compared to +.9% expected while ex food & energy was +.5% MoM compared to +.1% expected, was the culprit for the steeper curve and the feelings translated into higher breakeven rates on TIPS, a proxy for inflation expectations. Ten-year breakevens were higher by 12 bps to 1.64%, and five-years were higher by 8 bps to 1.14%. The market held off on going crazy, as they waited for today’s CPI release which came in higher than expected but we’ll leave that for tomorrow’s post.
Cliff J. Reynolds Jr.
No comments:
Post a Comment